Arlo Technologies (ARLO) AI Stock Analysis

• Market Cap: $1.51B
• Dividend Yield: N/A
• Average Volume (3M): 1.67M
• Price to Earnings (P/E): 97.7
• Beta (1Y): 1.97
• Revenue Growth: -2.83%
• EPS Growth: N/A
• Country: US
• Employees: 360
• Sector: Industrials
• Sector Strength: 72
• Industry: Security & Protection Services
• EPS (TTM): 0.22
• Shares Outstanding: 106,855,415
• 10 Day Avg. Volume: 1,515,326
• 30 Day Avg. Volume: 1,670,975
• PEG Ratio: -0.67
• Price to Book (P/B): 11.40
• Price to Sales (P/S): 2.75
• P/FCF Ratio: 21.79
• Enterprise Value/Market Cap: 0.92
• Enterprise Value/Revenue: 2.63
• Enterprise Value/Gross Profit: 5.98
• Enterprise Value/Ebitda: 75.30
• 1Y Price Target: $23.50
• Price Target Upside: 66.78% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 0.78
• Revenue Forecast (FY): $563.20M

• Rating: 71 Outperform
• Price Target: $15.00 ▲(6.46% Upside)
• Action: Reiterated Date: 03/02/26
• Date: Action: Reiterated 03/02/26

ARLO’s score is driven primarily by improved fundamentals (strong recent cash flow and low leverage) and a positive earnings outlook centered on services/ARR growth and expanding profitability. Offsetting this are a stretched technical setup (overbought conditions) and a high P/E valuation that increases downside sensitivity to any execution or margin setbacks.

Positive Factors

Free Cash Flow Generation

Sustained positive operating and free cash flow through 2025 materially improves financial flexibility. Durable FCF funds product development, marketing for subscription conversion, buybacks ($45.5M repurchased in 2025) and provides a cushion against cyclical hardware weakness, supporting multi‑quarter strategic execution.

Services / ARR Expansion

Shifting revenue mix toward high‑margin recurring services and accelerating ARR increases predictability of cash flows and unit economics. Higher ARPU, improved LTV:CAC and falling churn imply scalable SaaS economics that can sustain margin expansion and reduce sensitivity to hardware cycles over the next several quarters.

Distribution Scale & Strategic Partnerships

A successful large product launch and major channel partnerships expand reach and accelerate installed base growth, which drives subscription attach and recurring revenue over time. Deeper retail shelf share plus partner integrations create structural distribution advantages and cross‑sell channels that sustain services growth.

Negative Factors

Negative Product Gross Margin

Persistently negative hardware margins materially dilute consolidated profitability and FCF if unresolved. Legacy EOL costs, promotions and low product margins can offset high‑margin services growth, making overall margin durability dependent on sustained hardware cost recovery or a faster shift to services revenue.

Tariff / Regulatory Cost Risk

Unresolved tariff exposure creates a structural cost overhang on hardware margin assumptions. A sustained 20% tariff raises BOM and forces either margin compression or higher retail prices, potentially slowing hardware demand and hampering the installed base growth that underpins subscription expansion over the next several quarters.

Operating Profitability Still Early / Thin

Despite a clear turnaround, margins are still narrow and profits are recent. Low EBITDA margin provides limited buffer to cost shocks or reinvestment needs; sustained margin expansion from services is required to lock in durable profitability, otherwise shortfalls could quickly reverse the recovery.

Arlo Technologies Business Overview & Revenue Model

Company Description

Arlo Technologies, Inc., together with its subsidiaries, provides a cloud-based platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific regions. It combines an intelligent cloud infrastructure and mobile app with various smart connected devices. The company offers Arlo essential indoor camera; Arlo Go 2 LTE/Wi-Fi security camera; Arlo Q and Arlo Q Plus, an indoor wired solution that allows users to monitor their surroundings; and Arlo Go, an LTE-enabled wire-free camera that provides untethered mobile security. It also provides Arlo Baby, a baby monitor with air quality and temperature sensors, motion and audio detection, and advanced night vision; Arlo Chime that pairs with the Arlo Video Doorbell to play a variety of ringtones or act as a siren; Arlo Ultra, an integrated spotlight and crystal-clear two-way audio with advanced noise cancellations camera; Arlo Pro 3, an integrated spotlight with color night vision camera; Arlo Video Doorbell delivers direct-to-mobile video calls and personalized alerts; Arlo Floodlight Camera, a wire-free variant LED camera, as well as Arlo Essential Spotlight; Arlo Ultra 2; Arlo Essential XL Spotlight; Arlo Essential Wire-Free Video Doorbell; and Arlo Pro 4 Wire-Free Spotlight. In addition, it provides Arlo accessories, such as charging accessories, device mounts, and device skins. Further, it offers Arlo app for iOS and Android devices that allow users to connect various devices; and Arlo Secure, with coverage for unlimited cameras and an enhanced emergency response solutions. The company offers its products through retailers, wholesale distributors, broadcast channels, wireless carriers, and security solution providers, as well as through its website. Arlo Technologies, Inc. was incorporated in 2018 and is headquartered in Carlsbad, California.

How the Company Makes Money

Arlo primarily makes money through a mix of (1) product sales and (2) subscription and service revenue. 1) Product revenue (hardware): Arlo sells smart security devices such as indoor/outdoor cameras, video doorbells, and related accessories. Revenue is generally recognized when products are sold through direct-to-consumer channels and through retail, distribution, and e-commerce partners. Hardware sales can be influenced by new product cycles, promotions, channel inventory levels, and broader consumer electronics demand. 2) Service revenue (subscriptions / software): Arlo generates recurring revenue from paid subscription plans (commonly marketed under Arlo Secure) that add cloud-based functionality beyond basic device operation. These subscriptions typically include features such as cloud video recording/storage, intelligent event detection/notifications, and other premium software capabilities. This stream is generally higher-margin and depends on the installed base of active devices, subscriber conversion, retention/churn, and pricing/packaging. Key factors and relationships affecting earnings: The company’s performance is driven by the size and engagement of its installed base (which supports service attach rates), the balance between lower-margin hardware sales and higher-margin recurring services, and its ability to distribute products through major retail/e-commerce partners and its own online storefront. If specific, current partnership terms or revenue-share arrangements are not publicly available in a given source, null.

Arlo Technologies Financial Statement Overview

Summary

Financials reflect a clear turnaround with strong recent operating and free-cash-flow generation and very low leverage. Revenue and gross margin have improved meaningfully, but profitability is still relatively early-stage and margins remain a key durability risk.

Income Statement

Revenue has grown steadily from $357M (2020) to $529M (2025), with modest growth in 2024–2025. Profitability has improved materially: the company moved from sizable losses in 2020–2024 to positive net income in 2025 ($14.9M, ~2.8% net margin). Gross margin also expanded meaningfully (about 15.5% in 2020 to ~44.0% in 2025), supporting the turnaround. The key weakness is that operating profitability remains thin (EBITDA margin ~1.1% in 2025) and the business only recently returned to profitability after multiple loss years.

Balance Sheet

Leverage is low and improving: total debt fell sharply to $6.7M in 2025 and debt relative to equity is modest (~0.05). Equity has increased versus 2024, and returns improved to a positive level in 2025 after several years of negative returns. The main watch-out is that the asset base has fluctuated over time and profitability is still early in its recovery, which could limit balance-sheet strengthening if margins slip.

Cash Flow

Cash generation is a standout. Operating cash flow and free cash flow are strongly positive in 2023–2025, reaching $78.7M and $66.9M in 2025, respectively, with strong free cash flow growth in 2025. This is a meaningful improvement versus negative cash flow in 2020–2022. A constraint is that cash flow can be volatile historically (notably negative in 2020–2022), so durability through a cycle remains the key question despite the recent strength.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	529.30M	510.89M	491.18M	490.41M	435.14M
Gross Profit	232.84M	187.50M	167.56M	136.03M	108.03M
EBITDA	19.60M	-31.69M	-20.24M	-52.11M	-45.05M
Net Income	14.93M	-30.50M	-22.04M	-56.63M	-56.03M
Balance Sheet
Total Assets	310.55M	298.40M	285.54M	272.20M	347.49M
Cash, Cash Equivalents and Short-Term Investments	166.43M	151.45M	136.50M	113.72M	175.75M
Total Debt	6.74M	18.36M	17.02M	23.47M	26.08M
Total Liabilities	182.71M	197.49M	182.26M	184.51M	234.84M
Stockholders Equity	127.84M	100.91M	103.28M	87.69M	112.65M
Cash Flow
Free Cash Flow	66.90M	48.62M	35.45M	-47.97M	-25.46M
Operating Cash Flow	78.72M	51.31M	38.30M	-45.96M	-23.20M
Investing Cash Flow	27.75M	10.84M	-50.69M	-31.77M	17.73M
Financing Cash Flow	-42.07M	-40.77M	-15.14M	-13.94M	-4.97M

Arlo Technologies Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 14.09
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARLO, the sentiment is Positive. The current price of 14.09 is above the 20-day moving average (MA) of 13.41, above the 50-day MA of 13.18, and below the 200-day MA of 15.57, indicating a neutral trend. The MACD of 0.31 indicates Negative momentum. The RSI at 56.52 is Neutral, neither overbought nor oversold. The STOCH value of 23.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARLO.

Arlo Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NSSC	78 Outperform	$1.55B	27.53	27.45%	1.29%	-2.28%	-9.94%
ARLO	71 Outperform	$1.51B	97.67	12.47%	―	-2.83%	―
SNT	67 Neutral	$70.91M	28.93	12.02%	―	―	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BAER	56 Neutral	$118.56M	23.99	7.38%	―	54.35%	70.17%
EVLV	52 Neutral	$952.35M	-36.39	-30.45%	―	41.61%	-1.76%
KSCP	41 Neutral	$49.68M	-1.48	-156.57%	―	5.50%	51.32%